Maintaining Real Estate Values for the Affluent Client: Why the Collaborative Approach Works Best
Estate planners, CPA's and bankers have a stake in maintaining and growing the wealth of their affluent clients.
When it comes to clients who own large and diverse real estate portfolios, however, ongoing vigilance is necessary to maximize values and prevent losses.
For a variety of reasons - clients' lack of interest in managing properties, complications arising from long term illness, family disputes or dysfunctions - property values can be put in jeopardy or eroded before the most dedicated professional has a chance to act.
Additionally, there exists a wealth of opportunities for the effective use of real estate to accomplish wealth transfer, opportunities that could result in significant income growth if recognized and taken advantage of in a timely manner.
Few professionals acting alone have the resources to monitor the many disparate threads inherent in real estate management.
But a third party advocate working with those professionals can orchestrate everything to maximize growth and prevent loss.
The more diverse the portfolio the greater the need for vigilance.
Certainly if the appreciated property is a single 20-unit apartment building, a competent realtor can be located to manage it.
But in the case of a diversified portfolio one individual who is capable of managing a wide variety of holdings and who understands how those various parcels work together within the estate plan is harder to find and can be advantageous.
Within our experience we have seen many situations where opportunities have been missed.
For example, many families own significant property that has appreciated substantially over time.
In light of the 1014 basis adjustment (loosely referred to as the step up in basis) many property owners have made a conscious decision to hold these properties until their demise, a set and forget strategy based on the assumption that there will be a step up in basis.
Yet in the event that the property's value declines below its basis, consideration might better be given to selling the property and making full use of the long term capital loss deductions.
It is not uncommon for elderly property owners to gradually lose interest in managing and overseeing the properties they own.
In these situations it is often prudent to purchase additional insurance coverage in the form of one or more umbrella policies.
Umbrella policies typically don't cost much and can provide additional layers of protection so appreciated values can pass intact to heirs and beneficiaries.
What's more, without vigilant oversight, property values can be eroded by tenant negligence.
Having a competent attorney whose primary focus is the maintenance of these values can be advisable to head off such emergencies.
Due to the interlocking complexities of estate planning and real estate ownership a collaborative approach is highly beneficial to the maintenance and growth of portfolio value on behalf of affluent clients.
When it comes to clients who own large and diverse real estate portfolios, however, ongoing vigilance is necessary to maximize values and prevent losses.
For a variety of reasons - clients' lack of interest in managing properties, complications arising from long term illness, family disputes or dysfunctions - property values can be put in jeopardy or eroded before the most dedicated professional has a chance to act.
Additionally, there exists a wealth of opportunities for the effective use of real estate to accomplish wealth transfer, opportunities that could result in significant income growth if recognized and taken advantage of in a timely manner.
Few professionals acting alone have the resources to monitor the many disparate threads inherent in real estate management.
But a third party advocate working with those professionals can orchestrate everything to maximize growth and prevent loss.
The more diverse the portfolio the greater the need for vigilance.
Certainly if the appreciated property is a single 20-unit apartment building, a competent realtor can be located to manage it.
But in the case of a diversified portfolio one individual who is capable of managing a wide variety of holdings and who understands how those various parcels work together within the estate plan is harder to find and can be advantageous.
Within our experience we have seen many situations where opportunities have been missed.
For example, many families own significant property that has appreciated substantially over time.
In light of the 1014 basis adjustment (loosely referred to as the step up in basis) many property owners have made a conscious decision to hold these properties until their demise, a set and forget strategy based on the assumption that there will be a step up in basis.
Yet in the event that the property's value declines below its basis, consideration might better be given to selling the property and making full use of the long term capital loss deductions.
It is not uncommon for elderly property owners to gradually lose interest in managing and overseeing the properties they own.
In these situations it is often prudent to purchase additional insurance coverage in the form of one or more umbrella policies.
Umbrella policies typically don't cost much and can provide additional layers of protection so appreciated values can pass intact to heirs and beneficiaries.
What's more, without vigilant oversight, property values can be eroded by tenant negligence.
Having a competent attorney whose primary focus is the maintenance of these values can be advisable to head off such emergencies.
Due to the interlocking complexities of estate planning and real estate ownership a collaborative approach is highly beneficial to the maintenance and growth of portfolio value on behalf of affluent clients.